The following data represent the total compensation for 12 randomly selected chief executive officers (CEO) and the company’s stock performance in 2017.

(a) One would think that a higher stock return would lead to a higher compensation. Based on this, what would likely be the explanatory variable?
(b) Draw a scatter diagram of the data.
(c) Determine the linear correlation coefficient between compensation and stock return.
(d) Does a linear relation exist between compensation and stock return? Does stock performance appear to play a role in determining the compensation of a CEO?

Transcribed Image Text:

Company Macerich Co Regency Centers Corp Rockwell Collins Inc Kohls Corp Interpublic Group Of Companies, Inc Microsoft Corp Henry Schein Inc International Flavors & Fragrances Inc Hanesbrands Inc Walgreens Boots Alliance, Inc Cerner Corp M&T Bank Corp Compensation (millions of dollars) Stock Return (%) -2.9 3.6 12.8 5.6 8.1 11.3 16.9 20 7.2 7.7 9.6 14.7 2.6 4.2 57 71 -11 38 -7.9 32 -0.3 2.8 42 11